PetroChina surpasses ExxonMobil in oil production

Former Shell Oil CEO John Hofmeister reacts


This is a rush transcript from "Your World," March 29, 2012. This copy may not be in its final form and may be updated.


PRESIDENT OBAMA: Right now, the oil companies are raking in record profits. They have got more than enough incentive to produce even more oil.


NEIL CAVUTO, HOST OF "YOUR WORLD": Well, keep it up because it is now working, Mr. President. Beat up big oil long enough, they do not look so big.

Congratulations. Today, your oil tanker ship has come in, because, today, big bad ExxonMobil is no longer the biggest or the baddest on the planet. Today, a Chinese company is.

Welcome, everyone. I am Neil Cavuto.

And incredible, and we may have a problem with big oil in this country, but not the Chinese with big oil in their country. Today, for the first time ever, the world’s biggest publicly traded producer is from China, not the United States, PetroChina, not ExxonMobil.

A company that wasn’t even around 13 years ago now pumping 2.4 million barrels of oil a day, 100,000 more barrels than Exxon. And a reminder that those countries that push their oil, well, they rule oil.

So, right now, China is ruling, we are drooling, and those gas prices, well, they are still soaring.

Former Shell CEO John Hofmeister says it really doesn’t have to be this way.

But, John, talk about impeccable timing. Bash the oil companies and their subsidies and our biggest takes the silver.

JOHN HOFMEISTER, FORMER SHELL OIL CEO: Well, the big difference, Neil, and everyone should understand this, PetroChina has had all the backing and support that they need from their sovereign government, the People’s Republic of China.

ExxonMobil and all the other domestic companies have had nothing but the back of the hand of this administration since it came into office. The president is partly responsible. So are his predecessor presidents, Republican and Democratic.

This government and this country has chosen to live off imports, instead of developing domestic natural resources, for most of the last 40 years. And this president, this administration has done nothing in the last three years but to put obstacle after obstacle in front of American companies trying to serve American consumers with American natural resources.

Americans should be very angry at this.

CAVUTO: But, John, how did PetroChina, which as I said wasn’t even around a little more than 13 years ago, get to be number one so fast?

HOFMEISTER: Well, China has a number one priority called economic development. You do not achieve economic development without abundant oil and natural gas resources. So they have basically written a blank check for PetroChina to go do deals with state-owned oil companies all over the world to make sure that China gets all the oil it needs.

In 2005, China used five million barrels a day. And this year it is 10 million barrels a day. And in 2015, it’s 15 million barrels a day. That is a tripling of the oil consumption over a 10-year-period. And we use 20 million barrels a day in a full economy. We are down to about 18 million now, given all the layoffs and the recession that we had.

But we only produce about seven million. We import the rest.

CAVUTO: So, then turn it around, John. Do you find it odd that part of the rationale for the president to keep pushing, for example, subsidies for green technology vs. ending them for the general oil industry is that China if we don’t move fast will control that industry, but apparently now China is getting to the point where it will control this industry, and that is OK.

HOFMEISTER: Well, China has been using cash loans to state-owned oil companies to guarantee oil deliveries, so they are subsidizing the production of oil in state-owned oil companies to make sure they get what they need.

The U.S. oil companies get these limited tax breaks, but keep in mind U.S. oil companies’ pay somewhere between 35 percent and 38 percent of their net income in taxes every year. And you don’t see that in PetroChina. What you see is China just making sure their economy will grow regardless of what it takes while we have a president and an administration who is holding back domestic resource production.

It is OK to support wind, and solar and bio-fuels, but it will not deliver material energy for decades into the future. What about the present?

CAVUTO: So, let me ask you this. Let me ask you this. Do you think the president was aware of the timing of his remarks this morning on the very same day he is bashing big oil that our biggest domestic oil producer, ExxonMobil, would fall to number two, or do you think he just didn’t care?

HOFMEISTER: I don't think it matters to the president.

He is on an agenda. It's called reelect me, and it is all about the election. The last three years, we didn't hear the president talk about an all in, all of the above oil strategy. It’s only in 2012 that suddenly we have an all in, all of the above energy strategy. And it is really about November. It’s not about fixing the underlying problem.

CAVUTO: All right. OK, John, thank you very much.

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